Keys to Spousal Business Succession

An adequately prepared spouse can be the golden key to a business's survival. Their designation as personal representative in either a durable power of attorney or a will gives them authority to represent an owner's interest in a company.

If the owner controlled the fate of their business, then their spouse can automatically succeed to that position unless limitations have been made in the estate planning documents. Thus, the ultimate fate of the company depends on the successor spouse's decisions. In many instances however, the successor spouse has been placed in their position as successor as a means of convenience; it never being expected that they will have to operate the family business. Little thought has been given to their qualification or ability to handle the burden suddenly placed on them.

Every spouse needs to have some type of organized action plan just in case they have to assume control. A prepared spouse is aware of their options for running a business before a triggering event occurs. Their options include:

· Continue to personally operate the business

· Operate the business as an overseer, not involved in daily operations

· Elevate a designated employee to be chief operating officer

· Hire a temporary experienced manager

· Sell all or part of the business as soon as possible

· Exercise an operating, purchase, or buy-sell agreement

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